A Los Angeles-area executive was arrested Tuesday in connection with a $9 million scheme to defraud United Commercial Bank and East West Bank, according to federal prosecutors.
Chung Yu “Louis” Yeung, 37, of San Dimas, was charged in an October indictment unsealed today in Los Angeles with one count of conspiracy to commit bank fraud and five counts of bank fraud, according to the U.S. Department of Justice.
Guo Xiang “David” Fan, 52, was also indicted for conspiracy to commit bank fraud and bank fraud, as well as money laundering, and remains at large, according to the DOJ.
According to the indictment, Yeung was vice president and Fan was president of Eastern Tools and Equipment, an Ontario company that sold portable generators and other equipment.
The indictment charges Yeung and Fan with defrauding United Commercial Bank and East West Bank, which took over UCB’s accounts, of more than $9 million.
Specifically, the indictment alleges that Yeung, Fan and others overstated Eastern Tools’ accounts receivable to increase its line of credit with UCB and later East West.
To support the inflated accounts receivable submitted to the banks, Yeung, Fan and others allegedly opened about 20 shell companies, backstopped with fictitious business name statements, post office boxes, bank accounts, and telephone numbers, according to the DOJ.
They then allegedly moved money from Eastern Tools’ bank accounts into the shell companies’ bank accounts to create the false appearance of substantial commercial activity.
Finally, Yeung, Fan and others allegedly siphoned those funds into their own personal accounts, prosecutors said.
East West Bank allegedly sustained a loss of about $9 million as a result of the fraud scheme, the DOJ said.
— City News Service